Manage Your Finances – Top Tips for Doctors
It is easy to get caught up in the ‘busyness’ of life and fail to manage your finances effectively. Things move so fast these days and before you know it another month has gone by and your credit card balance is higher than its ever been.
Debt can be a major cause of stress. Getting it under control will lower your stress and positively affect the quality of your life. You will sleep better, work smarter, have more patience to enjoy life more.
Here are some tips to help you manage your finances instead of your finances managing you.
Live Below Your Means For A Few Years
This is probably easier if you just finished your residency because you are used to living on a student income. Try to manage your finances by living a frugal lifestyle. Use the higher salary you make to pay off a large part of your student loans and build some savings and a retirement account.
If you having been in the practice for a while have a lot of your money spoken for, try to reduce some of your expenses so you can direct your money to your debt and add to your savings. This will help reduce your stress as well.
Use Only Cash for a While To Manage Your Finances Better
When you pay with cash for your daily spending, you are more mindful of how much money is leaving your pocket. When you swipe a credit card, it’s almost like invisible money. You don’t realise how much you’re spending until you see the statement at the end of the money.
This can be a little challenging to do, and well worth it when you see results.
Invest in the Right Kind of Insurance and Estate Planning
This will depend on your circumstances. For example, if you are not married and don’t have kids and are not supporting anyone financially, you don’t really need life insurance. Find a financial advisor and/or lawyer that you trust to talk about your current situation and plan accordingly.
Hire a Financial Advisoer You Trust to Help You Manage Your Finances
Speaking of financial advisors and lawyers, do your homework and go with someone you trust. Choose an independent Financial Advisor rather than one who works for a company and has to sell you specific products.
Ideally it is best if you can educate yourself as much as possible and do some of your investing on your own. Index tracker funds are a great way to invest.
Educating yourself so you can manage your own finances will benefit you because you want to be able to understand what your financial advisor is doing. Also look at the commissions your financial advisor is taking – Even just a few percent makes a huge difference over time.
Have a Big Vision with Specific Details to Manage Your Finances
What do you really want for your life and by when? You need to be clear on this so that you can set up your finances to support you.
If you really want to pay off your student loan to get it off your back, then write it down and put a date to it. Keep this paper where you see it daily so you remember what you are working towards.
Have a Monthly Budget and Stick To It
Once you have a vision of what you want, determine how much money a year you need to do it.
Create a monthly budget so you can manage your finances and put as much of your pay cheque as possible to work towards your bigger goals.
Set up automatic deposits every month to put money into your savings and retirement accounts or make extra payments on your student loan.
If you don’t know where to start or would like some help, we would be happy to talk to you.